The No.2 U.S. automaker said Wednesday it will spend $135million to design parts for its next wave of electrifiedvehicles and double its battery testing capability by next year.

This summer, Ford began building its own hybridtransmission. More than 1,000 Ford engineers are devoted toadvanced vehicle development and Ford plans to hire more.

These efforts allow Ford to complete projects more swiftlyand cut overall development costs, executives said. They alsoallow Ford to react more nimbly to changes in consumer demand.

"We're not wed to any one specific technology," said KevinLayden, head of electrification programs and engineering. "I'mfree to play the field and I'm very comfortable with that."

Improving fuel economy is a cornerstone of Ford's vehiclestrategy. Ford expects hybrids, plug-in hybrids and EVs willaccount for as much as 25 percent of its global sales by 2020.

Ford this year is launching five electrified vehicles,including hybrid versions of the Fusion midsize sedan and C-Maxcrossover. The C-Max gets 47 miles per gallon, beating theToyota Prius V, which gets 44 miles per gallon.

But Ford still lags far behind Toyota, which has dominatedthe market with its Prius hybrid family. So far this year, theToyota brand has accounted for two-thirds of the U.S. hybrid andEV market, while the Ford brand represents 3 percent, accordingto Edmunds.com.

The high cost of batteries and electric drive componentsrepresents another challenge. To combat that, Ford, like otherautomakers, is increasingly looking to maximize the number ofmodels and parts that can be built on a single line.

For example, Ford now builds a hybrid transmission at itsVan Dyke Transmission Plant near Detroit. On one side of analuminum palette, workers build a conventional six-speedautomatic transmission. On the other side is the hybrid version.

Ford previously bought these transmissions from Japaneseparts supplier Aisin. Bringing production in-houseallowed Ford to shave 20 percent from development costs, partlyby saving on shipping and component costs. The model also givesFord the choice to build more or less depending on demand.

"It's not just cost savings. It's market opportunity aswell," said David Cole, chairman emeritus for the Center forAutomotive Research. "If your competitior has products but youdon't, that's a problem."

Ford is also seeing savings from bringing battery design andtesting internally after relying heavily on outside suppliers todesign and test batteries for its earliest hybrids.

The expansion of battery testing allows Ford to finishprojects at least 25 percent faster than with the previousgeneration of hybrid and electric vehicles.

The automaker said its current hybrid system costs 30percent less than the previous version. The new system relies ona more-efficient lithium-ion battery, while the Ford's originalEscape SUV hybrid used a nickel-metal hydride battery.